Strategic Information System: Commonwealth Bank of Australia

This report provides an internal and external analysis of Commonwealth Bank of Australia (CBA) with a focus on strategic information systems. It includes a PESTEL analysis, Porter’s Five Forces, resource identification, competency analysis, and a proposal for a decision support system. The report also evaluates the value-added services of CBA.

Running head: STRATEGIC INFORMATION SYSTEM
Strategic Information System: Commonwealth Bank of Australia
Name of the Student
Name of the University
Author’s Note:

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Table of Contents
Introduction...........................................................................................................................................2
Discussion.............................................................................................................................................2
Part 1: External Analysis...................................................................................................................2
1. Background of Business............................................................................................................2
2. Description of Industry of the Company....................................................................................2
3. PESTEL or General Environment Analysis of CBA..................................................................2
4. Explanation of Industry Environment with Porter’s Five Forces...............................................3
5. Competitive Environment of CBA.............................................................................................4
6. Opportunities and Threats of CBA............................................................................................4
Part 2: Internal Analysis....................................................................................................................5
1. Tangible and Intangible Resources of CBA...............................................................................5
2. Identification of the Capabilities................................................................................................5
3. Analysis of Core Competencies.................................................................................................6
4. Proposal of Information System with Strengths and Weaknesses..............................................6
5. Evaluation of Information System and Value Added Service in CBA.......................................6
Conclusion.............................................................................................................................................7
References.............................................................................................................................................8

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Introduction
Strategic information system is referred to as a systematic structure that is responsible for
developing several corporate business initiatives in a business. Moreover, it is quite helpful in
recognition of opportunities and threats so that overall growth and development of the organization is
used in business operations (Hill 2017). The following report outlines a brief discussion on the most
popular banking organization in Australia, namely Commonwealth Bank of Australia or CBA. This
report is sub divided into two parts for completion of internal and external analysis of the company.
External analysis includes PESTEL analysis and Porter’s Five Forces, whereas internal analysis
includes resource identification and competency analysis. Suitable recommendations would be
provided regarding information system.
Discussion
Part 1: External Analysis
1. Background of Business
Commonwealth Bank of Australia or CBA is the most popular multinational banking sector in
Australia that has businesses in New Zealand, Australia, the UK, USA and Asia. Variety of several
financial services like funds management, retail banking, broking service, institutional and business
banking, investment and insurance are provided by them (Commbank.com.au. 2019). The total
revenue of this bank was 26.005 billion Australian dollars in the year of 2017 and that of total income
was 9.881 billion Australian dollars. More than 52000 employees are working in this bank currently.
Matt Comyn is the CEO and Managing Director of this bank. He was appointed on 29th
January 2018 and took his position from 9th April 2018. Being an Executive MBA holder from
Sydney University, Matt Comyn joined CBA in 1999 starting within the institutional banking
division. Before undertaking CEO position, he was working in the Group Executive Retail Banking
Services for more than 5 years.
2. Description of Industry of the Company
CBA belongs to the banking industry of Australia. The entire industry is dominated by four
popular banks, namely CBA, ANZ Banking Group, NAB and Westpac Bank. This financial service
sector is the highest contributor to the economy of Australia and more than 140 billion Australian
dollars are contributed from this particular industry. The national economy is driven majorly and
around 450,000 people are being employed.
3. PESTEL or General Environment Analysis of CBA
PESTEL analysis of CBA is eventually done by considering few important and significant
factors (Hitt and Duane Ireland 2017). These are even termed as macro external factors as they are

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responsible for helping to understand the specified position of this company outside the market. These
seven factors are as follows:
i) Political Factor: There are few political factors that affect CBA majorly. The first and the
foremost factor is political stability and importance of banking sector in country’s economy. Australia
being one of the most popular and significant country, requires banking sector to enhance their
economy (Doz 2017). Pricing regulation is yet another important political factor for maintenance of
favoured trade in the country and CBA had been successful in managing these issues.
ii) Economic Factor: The exchange rates of this country varies significantly with rest of the
countries worldwide. As there is a major growth rate in economic sector, the unemployment rate as
well as inflation rate get reduced. This is the reason economic factors have strong impacts on CBA
and hence efficiency is enhanced.
iii) Social Factor: CBA had always been an interactive banking sector with its customers.
They share benefits with the customers and thus it has become of the most popular and significant
banks in the entire Australia (Wheelen et al. 2017). Clients’ demands and requirements are kept on
top priority and are fulfilled successfully. Moreover, with their 24 hours online services, it is quite
easy to communicate regarding the problems faced.
iv) Technological Factor: Advanced technologies are utilized in this company and thus
business processes and operations are easily executed. The product offering and value chain structure
are also impacted with this particular factor. The next technological factor that impacts CBA is the
rate of technological diffusion.
v) Environmental Factor: Environmental factors that have stronger impact on CBA include
laws regarding the market in which this bank is operating (Meyer, Neck and Meeks 2017). Since, they
have branches in all over the world, before entering into a new market, they always completes a
market survey and evaluate the respective environmental standards, needed for operation in these
markets.
vi) Legal Factor: There had been a legal framework in the respective organizational structure
and these laws are required for the protection of intellectual property rights of the company. They
even follow antitrust law, discrimination law, patent law, employment law and computer protection
and e-commerce laws. Illegal activities are thus not tolerated in this specific bank.
4. Explanation of Industry Environment with Porter’s Five Forces
The industry analysis of CBA with Porter’s Five Forces is as follows:
i) Supplier Power: The supplier power is extremely high in Commonwealth Bank of Australia
(Ethiraj, Gambardella and Helfat 2018). As, it is the most popular banking company in Australia, they

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have their major suppliers solely engaged for the purpose of distributing services and products to
every part of the world. The number of suppliers is less and thus switching expenses are high in this
particular organization.
ii) Buyer Power: Buyer power is majorly effected by the competition in existing market.
Although, Australia has several popular banking companies, the number of buyers is much high in
CBA.
iii) Potential Entrants: Various new banking sectors are entering into the market and hence
there is always a major threat that their position could be taken and they might be in a down position
(Michael, Storey and Thomas 2017). It is a major threat in this company.
iv) Substitute Products: The substitute products in the banking sector refer to the variety of
interest rates and banking services. If CBA would not bring any innovativeness within their products
and services, it is evident that they would lose their position in the existing banking market.
v) Rivalry amongst Competitors: Australia is dominated by four distinctive banks, namely
Commonwealth Bank of Australia, NAZ Bank, Westpac Bank and ANZ Bank (Renz 2016). Hence,
there is always an ongoing competition between the other three banking organizations.
5. Competitive Environment of CBA
The competitive environment of this particular organization is helpful for understanding the
position of the market effectively. CBA has hence formed a specified strategic group for the purpose
of analysing their competitive environment by undertaking strategic information system (Morden
2016). It can easily and promptly deliver products or services to the customers by involving lower
interest rates and better insurance planning. This has differentiated and has focused on their distinct
market segment. Hence, CBA has been able to categorize, store, process as well as transfer the
accurate information, which is required to received or created.
Once evaluation is done, this strategic information system helps this organization of CBA to
identify their competition in the market. With the help of this aspect, competitive advantages are
enhanced majorly and they had been successful for more than 100 years in the market. The similar
banking services from the organizations of NAZ Bank, Westpac Bank and ANZ Bank in Australia are
threats for their competitive environment (Bryce 2017). The supplier power is much lower for them in
respect to the buyer power and thus it could be mentioned that CBA is enjoying a top position in the
market.
6. Opportunities and Threats of CBA
The major and the most important opportunities and threats of CBA are given below:

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i) Opportunities: The major opportunity of this particular bank of Commonwealth Bank of
Australia is their innovation in products and services for the respective clients or customers. This
would be quite helpful for them to improvise the overall market position. Hence, ensuring that
innovation and variety would be highly enhanced in the banking services (Trigeorgis and Reuer
2017). The next significant opportunity of CBA is the regular market survey that they had been doing
for bringing better effectiveness and efficiency in the products and services and even fulfilling each
and every demand of their client.
ii) Threats: In spite of the factor that CBA comprises of some of the major and the most
significant strengths, opportunities and weaknesses, there had been some of the major and the most
significant threats, which could make their position much lower than expected. The major threat of
CBA includes entrance in a new market and reduction of the overall business growth ((Bettis et al.
2015). When customers would be getting better services in lower interest rates and planning, it is
evident that they would be losing their premium clients. The reason for this would be that costs of the
services and products in quite high in CBA in comparison to other Australian banks.
Part 2: Internal Analysis
1. Tangible and Intangible Resources of CBA
Commonwealth Bank of Australia subsequently produces several types of services and
products for the clients. They have been using some of the major resources and these resources could
be sub divided into two types of tangible and intangible (Bailey et al. 2018). The tangible and
intangible resources of CBA are as follows:
i) Tangible Resources: The major tangible resources that are used by CBA to gain business
opportunities and competitive advantages are cash, inventory, trucks, building, machineries and
marketable securities. They use these resources for the betterment of their business.
ii) Intangible Resources: The intangible resources, used by CBA for bringing organizational
efficiency are patents, trademarks, copyrights, brand image and goodwill (Hanson et al. 2016). These
resources help them in maintaining their brand name in the market.
2. Identification of the Capabilities
Various opportunities are being achieved by CBA and these could be utilized for recognizing
the organizational capabilities. Although, CBA is on the top position in banking industry, they still
have a capability to grow better in the market. The business related strategies could be easily deployed
by the incorporation of SIS and hence it is being utilized in almost every popular company. Since,
there is a chance of other banks to take their position, they should have the capability to get
accustomed to new innovation and efficiency (Peppard and Ward 2016). Moreover, they even have

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the capability to be technological advanced for making better products and services even better for the
customers.
3. Analysis of Core Competencies
The analysis of core competency helps CBA for better determination of organizational
capabilities and making better strategic planning. Four tests are done for this purpose and these tests
are as follows:
i) Strategy must provide subsequent value for company growth.
ii) Strategy must be useful for increasing market shares.
iii) Competitors should be analysed.
iv) Strategy must bring out the competitive advantages.
The major competitive advantages of CBA include brand loyalty and higher revenue
(Lasserre 2017). They had been enjoying these two advantages since they have started their
organization and thus have reached to the perks of success.
4. Proposal of Information System with Strengths and Weaknesses
The most suitable information system that can easily streamline their business objectives and
also align the business processes effectively is DSS or decision support system. It is a strategic
information system that reduces complexity for decision making. . It enables business opportunities as
well as strategies in such a method that the computer systems could easily affect and bring success in
organizational goals, services and products (Meyer, Neck and Meeks 2017). Moreover, business
initiatives are developed easily and major support is given to that specific business. The competitive
advantages of the firm are well enhanced with this type of information system. Furthermore,
competition could be reduced majorly.
The strengths of DSS are as follows:
i) Easier decision making process.
ii) Better streamlining of business process.
iii) Easy achievement of business objectives.
The weaknesses of DSS are as follows:
i) Extremely costly and hence could not be used by all companies.
ii) The information system requires regular maintenance without any failure.

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5. Evaluation of Information System and Value Added Service in CBA
Decision support system serves all business levels such as management, operations and
planning within any company and thus decision making is done effectively and efficiently. Moreover,
it consists of the core ability to sort out issues related to structured as well as unstructured decisions.
Hence, it is highly recommended for this bank to bring better innovation and efficiency in the services
(Wheelen et al. 2017). The value added service in this CBA that increases bank customer retention is
improvement of credit union and enhancement of customer comfort as well as loyalty via dynamic
payment processing.
Conclusion
Therefore, from the above provided discussion, it can be concluded that SIS is extremely
useful and helpful since it allows various resources of the information services to be applied within a
business without any kind of complexity. As strategic information system can eradicate the business
related issues, it becomes quite easy for the business owners in increasing business efficiency and
effectiveness. The above provided report has properly outlined a brief description of application of
strategic information system in an Australian firm, called Commonwealth Bank of Australia. External
and internal analysis of this organization has provided details regarding organizational background
and environment of CBA. Proper and relevant recommendations are provided for an information
system and value added service within this particular organization.

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References
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